Islamic Finance | Opportunity to build Ethical Money

Islamic finance derives and defends its thought of existence by the Shari’ah which is attributed from the Holy Quran & the Sunnah, that is, the deeds, utterances and tacit approvals of Prophet Muhammad (PBUH), as related in the hadith, handed down through a dependable chain of transmitters. Broadly, for the past 6 decades Islamic economy has emerged to be alternate to capitalism and communism as Muslim states sees to it that Islamic rules are strictly observed and Islamic finance is one of the predominantly growing segments nowadays.

As far as the globalized world is concerned, the MENA region has played a great role by transforming Islamic financial activities to be introduced globally and Islamic economies to flourish starting from oil producing countries in the GCC and stretching to the capitalist economies like UK very swiftly, and sharp.

 Despite the wealth creation and intermediary roles expected from an economic model and financial activities; the two most economic philosophies; communism & capitalism has came across a long way; yet, with considerable failures which eventually created a Sevier complication stretching from building an egotistic society, structural economic failure, war and polarized socio economic development in the globe, which eventually exacerbate slide in values , accelerated ethical degradation and rivalry. Scholars in Islamic economics argue that Islamic economy is far better than both communism and capitalism by building ethical political economy and equitable wealth creation/distribution rationalized with various tested models which should be acknowledged and sighted as one of the best models to prosper as a society even for non Muslim communities. Vis-à-vis this analogy, the world seems to accept and try Islamic financial instruments and financial models, both from east and west; that I will be discussing in my following articles.

Idiosyncratic to conventional banking, It is well known that Islamic finance is based upon the prohibition of interest, but that is not the only reason for rejecting part of the conventional range of financial instruments; there are also others one should clearly distinguish. In my opinion, this should be briefly justified from ibadat, devotional matters, and muamalat, dealings in the political, economic and social spheres by framing our scope just to “Why Islamic economy? & Why Islamic finance in particular?” from both Islam & Christian Holy books viewpoints.

Riba / Interest /

The condemnation of interest has not been confined to Islam. Based on passages from the Bible, the Christian Church at various times took a strong stand against demanding and paying interest. Notwithstanding the two religions, there were also a philosophic argument drawn on Aristotle, who in his Politika (book I, ch. 10; Aristotle 1992, pp. 85–7) argues that money has been developed first and foremost as a means of exchange and that, consequently, it should be used for making purchases and not for lending and receiving a reward for that lending. Lending money and receiving a reward for lending goes, in Aristotle’s view, against nature.

The Quran Sura 30, Al-Rum

39. That which you seek to increase by usury shall not be blessed by Allah; but the alms you give for His sake shall be repaid to you many times over.

Sura 3, Al-Imran

130. Believers, do not live on usury, doubling your wealth many times over. Have fear of Allah and you shall prosper.

The Bible

 Psalms 15

. . . lends no money at interest, accepts no bribe against the innocent. Whoever acts like this shall never be shaken.

Ezekiel 22

12. There are those in you who take bribes to shed blood. You exact interest and usury; you despoil your neighbors violently; and me you have forgotten, says the Lord GOD.

The Prohibition of Gharar and Maysir

Commercial activities are permitted under Islam, but they are subject to the ban on riba. They are also subject to another restriction: the ban on gharar and maysir. Gharar is risk, uncertainty, and maysir is gambling or speculation is also distinctively preached throughout the old and new testament in the bible.

The Quran Sura 2, Al-Baqara

219. They ask you about drinking & gambling. Say: ‘There is great harm in both, although they have some benefit for men; but their harm is far greater than their benefit.

The Bible 2 Corinthians 10:5 

We are destroying speculations and every lofty thing raised up against the knowledge of God and we are taking every thought captive to the obedience of Christ. 

Zakat / required alms giving /

Zakat is one of the five pillars of Islam, and refers to the requirements of believers to give offerings to the needy. Similarly in Christianity, God commands each Christian to donate 10 % of his or her earnings to the church called tithes, which are used to provide for the poor.

The Quran 2:110, Qur’an

And establish prayer and give Zakat, and whatever good you put forward for yourselves – you will find it with Allah.

The Bible Leviticus 27:30

Every tithe of the land, whether of the seed of the land or of the fruit of the trees, is the LORD’S; it is holy to the LORD.